Seoul, Banks In Legal Row On Disclosure

The conflict between the Seoul Metropolitan Government and banks over the legality of an inquiry into the financial assets of large-scale tax evaders may develop into a legal battle.

The city administration said Thursday, "We have asked judicial advisers to review the legality of suing financial institutions that were not cooperative in the inquiry, and of filing a civil suit for compensation."

The Korea Federation of Banks had asked Monday for legal advice on whether the city's demands for disclosure of the records of some of its customers' financial assets violated the Act on Real Name Financial Transactions and Guarantee of Secrecy.

The act requires financial institutions to notify account owners of inquiries into their financial assets, unless the inquiry relates to violations of law, in which case the banks are to delay their notification to the account owners by six months.

"We asked for the disclosure of financial assets without informing owners of the accounts, according to the act," a city official said. "But the financial institutions rejected our demands and informed them. The concealment of financial assets is increasing."

The city suspects that the banks' hints have led to accounts being emptied over the past month or two. It accuses the banks of hampering public work.

An official at the bank federation responded that meeting the city's demands would violate the law that stipulates that only minimal transaction information can be asked for. He argued that postponing the inquiry notification to customers by six months was also stretching the law.

A Finance and Economy Ministry official said, "Technically, it is difficult to say that the Seoul city's demands conflict with law. However, it cannot punish or force financial institutions that reject them."

The metropolitan administration announced that it had asked banks in May to look into financial assets of 127,000 account owners who allegedly had evaded more than 1 million won ($767) in tax, and that it had identified 48.6 billion won in assets in 3,976 of the accounts.

by Kim Young-hoon